VALUE: After Hours (S08 E13): The Hidden Limits of AI Growth: Energy, Commodities, and Reality Check

During their recent episode, Taylor, Carlisle, and Mark Cooper discussed The Hidden Limits of AI Growth: Energy, Commodities, and Reality Check. Here’s an excerpt from the episode:

[Mark] Actually, I think it’s three. Okay. So we built three in 25 years.

The fastest one of those from our research, it was from the time they started construction, right? So forget permitting. Construction was 10 years.

So if you ask me, are we going to build 48 gigawatts in the next three years? I’d say absolutely not, right? So there are constraints to the system that are outside everybody’s hopes and dreams.

[Jake] And listen, we hope- Not on my spreadsheet. It looks like it’s just a cell that says 48 gigawatts.

[Mark] Exactly. So again, I don’t try to be the… We just tell you what we believe, right?

And we could be wrong, but our analysis would say it’s going to be very, very difficult to do this, right? And the amount of commodities you need, whether it’s copper, platinum, palladium, their arid elements, nickel, go down the list, right? There’s a long list of commodities where the production amounts needed in the next few years are astronomical.

You need copper. You’ve got the biggest country in the world, copper-producing country, Chile, is restricting copper production. But you need the equivalent of the six biggest mines in the world coming online every couple of years to grow, right?

And if this was oil, if we said, you need three Gowars coming on, the biggest field in Saudi Arabia, right? Which by the way, now is shut down and we’ll have a tough time getting back to the level of producing anytime soon. If you can’t bring commodities on fast enough.

So it’s not even a function of price, right? It doesn’t matter if copper is $5 a pound or $50 a pound. There’s a limitation to how fast this can be produced.

And so we think that’s going to temper everybody’s enthusiasm. So we’re a little sceptical from that perspective.

[Tobias] I saw a good stat the other day that the biggest copper mine in the world is Escondida, which means hidden in Spanish. Somebody on Twitter told me. And by 2030, we need eight more Escondidas, which is a lot.

And I don’t know if there are eight more Escondidas in the world.

[Mark] And by the way, even in an environment now where copper is up, I may be a little bit older than this, maybe a couple of months old, but I think three of the largest six mines are going to produce less copper, including Grasberg, which is the second biggest copper mine in Indonesia, Freeport owns Grasberg, the second biggest copper mine in the world. Three of the biggest six are going to be down production over the course of the next year. So again, you need to grow the overall production rate at double digits, mid-teens, whatever the number is, maybe more.

If you don’t get any growth from the biggest guys, it’s going to be quite difficult to get it from the smallest.

[Tobias] It’s going to be hard to hit.

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VALUE: After Hours (S08 E13): The Hidden Limits of AI Growth: Energy, Commodities, and Reality Check

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